Cooperation in water use without high cost

On September 8, Scott Sumner posted about how Californians are reducing electricity use in response to requests from the California Office of Emergency Services. I commented that I was surprised by this.

In response, my former Hoover colleague Alvin Rabushka sent Scott and me the following email:


I moved into my Stanford campus residence on July 3, 1976 (still there). During that time, 604 single-family residences and 82 small condos were built for retirees on campus.

The houses are not metered. Homeowners pay a monthly water fee with no usage restrictions. Homeowners with pools typically drain and refill them annually.

1975-76 was a dry year. The drought continued into the following year. Stanford’s water supply from Hetch Hetchy Reservoir was running dangerously low.

In the fall of 1976, Stanford urged all homeowners to reduce their water use, advising those with pools not to drain and refill.

what happened Water consumption is reduced by 50% in the following academic year. Monthly water charges remain unchanged.

Rains returned in 1977/78. In addition, Stanford installed water meters and charged for the amount consumed.

I recall discussing this reduced use with Sam Peltzman, Sherwin Rosen, and other visiting economists at Hoover that year and the following year. They were shocked that such large cost cuts had been made without raising prices.


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